Forget the Facts and Focus on the Fourth?

Portfolio managers are human and I cannot find any other reason for stocks to be up so much this morning. It would seem PMs on vacation for the holiday shortened pre-earnings season period are sending in bids based on their beach high. I make this illogical baseless sort of psychic reading, because the facts being displayed in the data today do not dictate a reason for enthusiasm. I suppose there could be some capital flow catalyst as well given the start of the new quarter, perhaps on anticipation of continued fund flows into equities. I’m not sure if that is going to hold up either friends, so I would not join in the party here; and stay out of the sun. For more in-depth analysis and research visit our stock market blog.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Market ETF	July 1	Year-to-Date
SPDR S&P 500 Index (SPY)	+1.1%	+13.9%
SPDR Dow Jones Industrial Average (DIA)	+1.1%	+15.1%
PowerShares QQQ (QQQ)	+1.2%	+10.7%

Economic Events

THE DAY’S ECONOMIC REPORT SCHEDULE
Economic Data Point	Prior Period	Expected	Actual
MONDAY
ISM Manufacturing Index	49.0	50.5	50.9
Markit PMI Manufacturing	52.3	52.3	51.9
Construction Spending	+0.1%	+0.6%	+0.5%

“Mixed results” best describes the economic reports reaching the wire Monday morning. One manufacturing measure outperformed against economists’ expectations while the other disappointed. The market gives more credence to the ISM figure, so it’s a net positive result. Even so, ISM’s Manufacturing Index still only managed to make it to 50.9, with 50.0 marking breakeven between expansion and contraction. Construction disappointed slightly, but the prior month figure was revised significantly lower; if it had been unchanged, then this month’s data would have fallen far short of expectations. The market is not inspecting this data that closely this morning, and is generally pleased with the result, given share performance.

Overseas Markets

EUROPE	9:32 AM ET	ASIA/PACIFIC	CLOSE
EURO STOXX 50	+0.9%	NIKKEI 225	+1.3%
German DAX	+0.5%	Hang Seng	+1.8%
CAC 40	+0.9%	S&P/ASX 200	-1.9%
FTSE 100	+1.2%	Korean KOSPI	-0.4%
Greek ASE	+0.4%	BSE India SENSEX	+0.9%

Markets are closed in Hong Kong, Thailand and Canada today. Asian shares generally rose, excluding Korea, perhaps on the strength of the Bank of Japan Tankan Survey. It showed improved sentiment among large manufacturers in June. The catalyst certainly was not China data, as the Markit Economics PMI Index for China fell in June to 48.2, from 49.2 in May. That marks two consecutive months of economic contraction in Chinese manufacturing, though the report indicates it’s the first reduction in “output”. Client demand declined according to managers, including demand from overseas, you know like from the EU and U.S. Speaking of Europe, unemployment climbed higher for the euro-zone, but the PMI data rose to a 16-month high, though that left it underwater at 48.8. Still, stocks focused on the change and not the absolute value still representing contraction in industry.

Commodity Markets (9:30 AM ET)

WTI Crude	+1.2%
Brent Crude	+1.0%
NYMEX Natural Gas	+0.3%
RBOB Gasoline	+1.1%
Gold Spot	+0.5%
Silver Spot	-0.1%
COMEX Copper	+2.9%
CBOT Corn	-1.1%
CBOT Wheat	+0.4%
CBOT Soybeans	+0.1%
ICE Cocoa	-1.0%
ICE Sugar	-0.5%
ICE Orange Juice Conc.	+0.5%
CME Live Cattle	-0.7%

Looks like traders donned their rose colored glasses and bought industrial commodities for the start of Q3, maybe on the holiday shortened week high. I agree with CNBC’s Santelli on this; he said this morning that this is a spinning of weak to strong, because the middling economic data just is not good enough to be enthused about. Still, money has to move and it is making bets now that perhaps will fall through the false floor they’re built upon. The data from overseas is not good, and the news here at home is not good either (GDP, manufacturing, true employment). The Fed does not have our back as it bails on housing, letting mortgage rates climb. So I cannot climb on board with momentum here because it cannot last.

Corporate Events

REPORTING EARNINGS
Company	Ticker
MONDAY
Advanced Photonics	NYSE: API
Investors Real Estate Trust	NYSE: IRET
Schulman (A.)	Nasdaq: SHLM
American Greetings	NYSE: AM
Mercury Systems	Nasdaq: MRCY

MOST ACTIVE STOCKS
BIGGEST GAINERS	% Gain
ONYX Pharmaceuticals (Nasdaq: ONXX)	+52%
News Corporation (NYSE: NWS)	+34%
Acura Pharmaceuticals (Nasdaq: ACUR)	+28%
B2Gold Corp. (NYSE: BTG)	+22%
Spherix (Nasdaq: SPEX)	+17%
TrovaGene (Nasdaq: TROVU)	+20%
Ligand Pharmaceuticals (Nasdaq: LGND)	+15%
Steinway Musical (NYSE: LVB)	+15%
Boston Private Financial (Nasdaq: BPFHW)	+13%
CounterPath (Nasdaq: CPAH)	+13%
BIGGEST LOSERS	% Drop
Blue Wolf Mongolia (Nasdaq: MNGL)	-99.8%
Pingtan Marine (NYSE: PME)	-17%
Insmed (Nasdaq: INSM)	-21%
InterDigital (Nasdaq: IDCC)	-14%
Alvarion (Nasdaq: ALVR)	-7%
Document Security (NYSE: DSS)	-11%
NTS, Inc. (NYSE: NTS)	-8%
News Corp. (NYSE: FOX)	-10%
Wave Systems (Nasdaq: WAVX)	-9%
ProShares Trust Ultra VIX Short (Nasdaq: UVXY)	-6%

I authored a couple articles over the weekend anticipating change on post quarter-end dynamics. My articles offered a sort of implied pair trade, to long Apple (Nasdaq: AAPL) and short Tesla (Nasdaq: TSLA), but the Tesla call was destroyed by a well-timed analyst defense and raising of price target. Call it coincidence? In any event, the stock still could give back after the day’s excitement wears off, though there is some power in setting the tone for the quarter on day one with a strong catalyst like an analyst’s report. Maybe next time we’ll wait and see what happens on day 1 and make the call on day 2, or hold off longer.

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